<PAGE>
As filed with the Securities and Exchange Commission on July 25, 1996
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
- --------------------------------------------------------------------------------
Date of Report (date of earliest event reported): July 12, 1996
- --------------------------------------------------------------------------------
CHELSEA ATWATER, INC.
(Exact Name of Registrant as specified in its Charter)
Nevada
(State or other jurisdiction of incorporation)
0-25022 72-1148906
(Commission File Number) (IRS Employer Ident. Number)
90 Madison Street, Suite 707, Denver, Colorado 80206
(Address of Principal Executive Offices, incl. Zip Code)
Registrant's telephone number, incl. area code: (303) 355-3000
-------------------------------------------------------------
(Former name or former address, if changed since last report)
================================================================================
<PAGE>
Item 5. Other Events.
Assignment of Certain Rights to the Company
CHELSEA ATWATER, INC., a Nevada corporation ("Company"), on July 12,
1996, entered into and consummated an Asset Purchase Agreement ("Purchase
Agreement") with Casino Casino PLC, a company organized in the Island of Nevis
(British West Indies) under Section 4(6) of the Nevis Business Corporation
Ordinance 1984, as amended ("Casino PLC"). Pursuant to the Purchase Agreement,
Casino PLC assigned to the Company certain rights which Casino PLC held under
an Option to Purchase and a Management Agreement, both dated June 26, 1996,
between Casino PLC and E.V.A. LIMITED, a limited liability company organized
in St. Vincent and the Grenadines (British West Indies) under the provisions
of the Companies Act, Chapter 219 ("EVA").
Transactional Background. West Indies Casinos and Consultants Limited,
a limited liability company organized in St. Vincent and the Grenadines under
the provisions of the Companies Act, Chapter 219 ("WICC"), owns in fee simple
a property situated at the town of Peniston Valley, in the State of St.
Vincent and the Grenadines known as the Emerald Valley Resort and Casino in
which a gambling casino is operated known as the "Emerald Valley Casino" (the
"Casino Premises"). Chalets 7/8, 9/10 and 11/12 and the Casino Premises are
below referred to as the "Leased Premises." Emerald Isle Casino Limited, a
limited liability company organized in St. Vincent and the Grenadines under
the provisions of the Companies Act, Chapter 219 ("Emerald Isle"), holds a
valid gaming license granted under the relevant laws of St. Vincent and the
Grenadines to operate casino and gaming operations on the Casino Premises (the
"License").
Pursuant to a Lease dated December 31, 1994, among WICC, Emerald Isle
and the San Jose Group, an unincorporated partnership, as tenant, the San Jose
Group was granted a lease covering and including (i) the Leased Premises
generally and the Casino Premises specifically, and (ii) the License itself
and all right of Emerald Isle to operate casino and gaming operations on the
Casino Premises pursuant to the License, all for six (6) one-year periods
commencing with the year beginning on February 1, 1995 and ending January 31,
1996, and for the five (5) suceeding one-year periods thereafter, ending on
January 31, 2000 (the "Master Lease"). San Jose Group subsequently assigned to
EVA all of its rights in, to and under the Master Lease.
Consummation of the Purchase Agreement. On July 12, 1996, the Company
consummated its acquisition pursuant to the Purchase Agreement of Casino PLC's
rights under the Option to Purchase and the Management Agreement (except for
Casino PLC's reservation of a revenue interest) upon the delivery of an
aggregate of 239,007 shares of the authorized but heretofore unissued common
stock of Chelsea, $.001 par value per share (the "Exchange Shares"), and
options (the "Exchange Options") to purchase an aggregate of 900,000 shares of
the authorized but heretofore unissued common stock of Chelsea, $.001 par
value per share (the "Exchange Option Shares"). The Company and Casino PLC
executed an Assignment and Reservation of Rights to formally effect the
consummation. The terms of the Exchange Options are as follows: (i) options to
purchase 300,000 common shares, exercisable from the date of issuance through
July 7, 1999 at a price of US$2.50 per share, subject to adjustment;(ii)
options to purchase 300,000 common shares, exercisable from the date of
issuance through July 7, 2001 at a price of US$5.00 per share, subject to
adjustment; and (iii) options to purchase 300,000 common shares, exercisable
from the date of issuance through July 7, 2002 at a price of US$10.00 per
share, subject to adjustment. The number of Exchange Shares and Exchange
Option Shares and the Exchange Option exercise prices stated in this paragraph
do not give effect to a 5:1 forward stock split effected by the Company
subsequent to consummation of the Purchase Agreement, as described below.
In order to exercise the Exchange Options, holders thereof shall be
required, unless waived by the Company, to give the Company not less than
sixty-five (65) days' written notice prior to such exercise. Otherwise, any
attempted exercise shall be effective only upon the earlier of (i) 65 days
from the date the exercising holder originally notified the Company in writing
of his intent to exercise, or (ii) if the holder gave no prior notice of
intent to exercise to the Company, 65 days from the date of the Company's
receipt of the exercise, which shall be treated as the required notice and
shall not be effective as an exercise until the lapse of the 65-day period
from the Company's receipt thereof.
2
<PAGE>
The number of Exchange Option Shares purchasable upon exercise of
Exchange Options will be subject to adjustment if the Company is reorganized,
merged, consolidated or party to a plan of exchange with another corporation
pursuant to which shareholders of the Company receive any shares of stock or
other securities, or in the event of any sale or other transfer of all or
substantially all of the Company's assets, or in case of any reclassification
of Company's common stock. Holders of Exchange Options shall be entitled,
after the occurrence of any such event, to receive on exercise thereof the
kind and amount of shares of stock or other securities, cash or other property
receivable upon such event by a holder of the number of Common Shares issuable
upon exercise of the Exchange Options immediately prior to occurrence of the
event. Both the number of Exchange Option Shares issuable and the exercise
prices of the Exchange Options will be appropriately adjusted to give effect
to a 5:1 forward split of the Company's common stock which was effective on
July 15, 1996.
The Exchange Shares and Exchange Options (and the Exchange Option
Shares issuable upon exercise thereof) have not been registered under the
Securities Act of 1933, as amended ("Act"), and were sold and issued in
reliance upon the exemption from registration provided by Rule 903(c)(2) of
Regulation S under the Act.
Option to Purchase. Pursuant to the Option, EVA granted to Casino
PLC an option for a period of eighteen months from June 26, 1996 to purchase,
for the sum of US$500,000.00 in cash, a direct assignment by EVA of the Master
Lease, or alternatively, to purchase for the same cash amount all of the
issued and outstanding shares of capital stock of EVA, excepting such nominal
number of those shares as may be required by law or otherwise to be retained
by citizens or residents of St. Vincent and the Grenadines. This Option does
not involve or allow for the possibility of the Company's acquisition of the
License itself or purchase of the Casino Premises or any part of the Leased
Premises, and it is doubtful that the Company ever could acquire the License
itself or title to any of the real property.
Management Agreement. Pursuant to the Management Agreement also dated
June 26, 1996, between EVA and Casino PLC, EVA appointed Casino PLC for an
eighteen-month period from such date as the sole and exclusive manager for the
purposes of operating and managing the sports betting portion of the casino
business carried on by EVA at Emerald Valley Casino pursuant to the License
(the "Sportsbook"). The Sportsbook includes all betting on and off the casino
premises made on horse, dog and other racing events (except certain horse
races in Trinidad and Tobago) and all sporting and other events occurring
outside the Casino Premises, including bets placed by telephone, telegraph,
electronic mail, facsimile transmission or other electronic and non-electronic
means, and made over the Internet or similar technology. The Management
Agreement expires at the end of its term or upon the Company's exercise of the
Option to Purchase, whichever first occurs. The Management Agreement further
gives the Company during its term the exclusive use of Emerald Valley Resort
Chalets 9/10 and 11/12 for no additional charge than the payments described
below.
During the term of the Management Agreement, the Company must make the
following payments to EVA:
(a) On or before October 1, 1996, a one-time payment of US$50,000.00;
and
(b) Commencing on October 1, 1996, a monthly payment of US$3,000.00,
payable each month on the first of each month during the term of the
Management Agreement. This monthly payment includes incidental charges
relating to Sportsbook operations, and power, water, groundskeeping, maid
service, linen laundry service and the like relating to the two chalets.
Pursuant to the Purchase Agreement, Casino PLC retained the right to
eight percent (8%) of the net revenues produced by the Sportsbook and actually
paid to and received by the Company. The term "net revenues" means revenues to
the Company after payment or deduction of all payouts to winning bettors, all
expenses, charges and reserves, any other revenue interests granted by the
Company and any other revenue or net revenue burdens, such as payments to
licensees.
3
<PAGE>
Assumption of Liabilities. The terms of the Assignment provide that
the Company assumes all of the liabilities of Casino PLC under the Management
Agreement, as described above. The Company will have no liabilities under the
Option unless and until it exercises the Option. The Company will have the
ability to exercise the Option or to make payments under the Management
Agreement unless the Company is able to raise additional equity capital or to
borrow needed funds. No source of funding or loans can be assured.
No Current Change in Management or Board of Directors. The consum-
mation of the Purchase Agreement has not resulted in any change in the
management or board of directors of the Company. However, the current officers
and directors of the Company have no experience in managing gambling
enterprises, and the Company hopes to be able to hire persons experienced in
casino and gaming management to provide gambling expertise that current
management lacks. The Company will not be able to attract or hire qualified
managers unless and until it is successful in raising additional capital.
Emerald Valley Hotel and Casino. The Emerald Valley Hotel and Casino
are well established, having existed for over twenty years, and are well
known. The hotel and casino are described in several of the Caribbean island
travel guides, including for example Birnbaum's 1996 Caribbean guide (Harper
Perennial Press, 1996) at page 728. The property consists of a central
building that includes the Emerald Valley Casino and a restaurant and bar, a
swimming pool and several cabanas, each including two rental units. More
cabanas are currently under construction. The entire property is located at
Peniston, approximately 7 miles from Kingstown, the capital of St. Vincent and
the Grenadines, in a lush and secluded spot. Plans include the construction of
a gof course on the property, as well. The casino, which opens in the evening
and closes at approximately 2:00 o'clock a.m. each day, currently relies
principally on patrons who are St. Vincent natives. A relatively small
percentage of gambling revenues comes from tourists, although the Company
believes that both native and tourist visits can be substantially increased by
active promotion.
St. Vincent and the Grenadines. St. Vincent and the Grenadines, a
sovereign nation with a population of roughly 100,000, is a chain of more than
100 lush tropical islands and cays, located in the southeast Caribbean between
St. Lucia and Grenada. More specifically, St. Vincent itself, an oval-shaped
island 18 miles long and 11 miles wide, lies approximately 75 miles northwest
of Grenada and 100 miles due west of Barbados and approximately 200 miles due
north of Venezuela. St. Vincent and the Grenadines are known to sailors and
yachtsmen for their many quiet bays, both black sand and powder white sand
beaches, exquisitely clear water and coral reefs. St. Vincent itself is an
island of verdant mountains and rain forests, alive with rushing rivers and
waterfalls. The capital of St. Vincent is Kingstown, a harbor city on the
southwest corner of the island. The E.T. Joshua Airport is located two miles
from Kingstown, where flights land from St. Lucia and Barbados.
The Grenadines include many islands and cays noted for their unspoiled
beauty and powder-while sand beaches, including Mustique (where Princess
Margaret, David Bowie and other notables own villas), Bequia, Canouan,
Mayreau, Union Island, the uninhabited Tobago Cays and many others. The
Grenadines also include a number of private islands which essentially are
resorts, such as Young Island, Petit St. Vincent and the Palm Islands.
St. Vincent somewhat lacks the glamour of (but equals in natural
beauty) other Caribbean islands with more developed tourist industries, but
has developed a native economy that is not dependent on tourism. However, St.
Vincent and the Grenadines generally is a poor, underdeveloped country which
plans to build a cruise ship port in Kingstown and take other steps to
substantially increase tourism and thus broaden the economic base.
Plan of Operation
The Company's plan of operation for the next twelve months commencing
August 1, 1996, is as follows:
1. To establish and grow the Sportsbook at the Emerald Valley Casino,
by means of direct sports betting at the casino, sports betting over 1-800
phone lines and sports betting over the Internet;
2. To exercise the Option to Purchase and acquire EVA's rights under
the Master Lease, then grow casino revenues, both by direct betting at the
casino and betting over the Internet.
4
<PAGE>
The Company will need to raise US$500,000 to purchase EVA's rights
under the Master Lease in order to operate the casino. Additional funds will
then be necessary to promote the casino and establish and grow the Sportsbook,
to build an Internet gaming site on the World Wide Web, and to hire managers
with suitable professional gaming experience. While the Emerald Valley Casino
itself has professional managers in place, the Company will need to hire
executives with gaming experience. While the Company believes it can acquire
the necessary capital, there is no assurance that the capital will be
available on any terms.
The Company plans to have its Sportsbook fully operational by the
start of football season and to exercise the Option to Purchase on the casino
by November 1, 1996. By the end of 1996, the Company intends to have its
Internet World Wide Web site fully operational, featuring the Sportsbook and
casino games. The virtual casino games are anticipated to include video poker,
blackjack, craps, roulette and baccarat.
Intended Change of Name
The Company has reserved the name "PLANET CASINO INCORPORATED" with the
Nevada Secretary of State. The Company intends, as soon as practicable, to
place before its shareholders a proposal to change the Company's name to the
name reserved, or possibly to another name to be selected by the board of
directors, which management believes will better reflect the Company's new
business endeavors.
Forward Split of Common Stock.
As permitted by the provisions of N.R.S. Section 78.207(1) of the
General Corporation Law of Nevada, the Company on July 15, 1996, effected a 5-
for-1 forward split of the Company's common stock, $.001 par value per share,
which had the effect of changing each share of common stock existing
immediately prior to the split into five (5) shares of the Company's common
stock following the split. Thus, for example, a person holding 1,000 shares of
common stock prior to the split would at the effective time of the split hold
5,000 shares of common stock.
The forward split increased the number of the Company's authorized
common shares from 50,000,000 to 250,000,000 and increased the number of
issued and outstanding common shares from 847,656 to 4,308,280. The $.001 per
share par value of the common shares was not changed as a result of the split.
The authorized preferred shares of the Company, the terms and preferences of
which have not been designated by the board of directors, were not affected by
the forward split. New certificates will be issued to shareholders evidencing
the new common shares issuable as a result of the split. The common shares
issued due to the split will have the same character and be subject to the
same restrictions (if any) as the original shares being split.
The forward split was effected by action of the Company's board of
directors without shareholder approval, which N.R.S. Section 78.207(1)
permits. The Company filed a "Certificate of Increase in the Number of
Authorized Shares of Common Stock" with the Nevada Secretary of State on July
15, 1996 in order to effect the forward split, which was effective when filed.
The filing of the Certificate of Increase also had the effect of amending the
Company's certificate of incorporation as then existing. No fractional common
shares should be issuable as a result of the forward split, but any resulting
fractional shares will be rounded up to whole shares.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements. Not required.
(b) Pro Forma Financial Information. Not required.
5
<PAGE>
(c) Exhibits. The following exhibits are filed as exhibits to this
report on Form 8-K. References in the list of exhibits to the "Company" refer
to Chelsea Atwater, Inc., a Nevada corporation.
3.5 Certificate of Increase in Number of Authorized Shares of Common
Stock of the Company, as filed with the Secretary of State of the
State of Nevada on July 15, 1996.
10.5 Option to Purchase granted by E.V.A. Limited in favor of Casino
Casino PLC dated June 26, 1996.
10.6 Management Agreement between E.V.A. Limited and Casino Casino PLC
dated June 26, 1996.
10.7 Asset Purchase Agreement between Casino Casino PLC as seller and
the Company as purchaser dated July 12, 1996.
10.8 Assignment and Reservation of Rights between Casino Casino PLC
and the Company dated July 12, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
DATED: July 29, 1996 CHELSEA ATWATER, INC.
By: /s/ John D. Brasher Jr.
-----------------------------------
John D. Brasher Jr., Treasurer,
President and Chief Executive and
Financial Officer
6
<PAGE>
================================================================================
CHELSEA ATWATER, INC.
(Exact name of registrant as specified in its charter)
=====================
EXHIBIT INDEX
to
FORM 8-K
Dated July 12, 1996
=====================
The following exhibits are filed as exhibits to this report on Form 8-K.
References in the list of exhibits to the "Company" refer to Chelsea Atwater,
Inc., a Nevada corporation.
3.5 Certificate of Increase in Number
of Authorized Shares of Common Stock of
Chelsea Atwater, Inc., as filed with the
Secretary of State of the State of Nevada
on July 15, 1996 ............................................. 1
10.5 Option to Purchase granted by E.V.A.
Limited in favor of Casino Casino PLC
dated June 26, 1996 .......................................... 1
10.6 Management Agreement between E.V.A.
Limited and Casino Casino PLC dated
June 26, 1996 ................................................ 1
10.7 Asset Purchase Agreement between Casino
Casino PLC as seller and the Company as
purchaser dated July 12, 1996 ................................ 1
10.8 Assignment and Reservation of Rights between
Casino Casino PLC and the Company dated
July 12, 1996 ................................................ 1
1 Filed herewith and included as part of this report on Form 8-K
dated July 12, 1996.
================================================================================
<PAGE>
Exhibit No. 3.5 to Form 8-K dated July 12, 1996 File No. 0-25022
----------------------------------------------- ----------------
CERTIFICATE OF INCREASE
IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK OF
CHELSEA ATWATER, INC.
(Pursuant to NRS 78.207)
The undersigned, being respectively the President or Vice President, and
the Secretary or Assistant Secretary, of CHELSEA ATWATER, INC. (the "Company"),
a corporation organized and existing under the laws of the State of Nevada, in
accordance with the provisions of N.R.S. Section 78.207(1) of the General
Corporation Law of Nevada, do hereby certify as follows:
1. That the Board of Directors of the Company has determined and
authorized that there shall be an increase in the number of shares of
authorized common stock of the Company and a corresponding increase in the
number of shares of Common Stock issued and outstanding (the "Increase") as
herein provided;
2. That the number of authorized shares of Common Stock of the
Company before the Increase hereby effected is 50,000,000, each share
having a par value of $0.001; and the number of authorized shares of
preferred stock is 5,000,000, each share having a par value of $.001 per
share and which shall remain unaffected by the Increase;
3. That, pursuant to N.R.S. 78.207(1), the Company's Board of
Directors has authorized the Increase in the number of the Company's
authorized shares of Common Stock from 50,000,000 to 250,000,000; and the
number of authorized shares of Common Stock after the Increase shall be
250,000,000, each having a par value of $0.001, all of which shall continue
to be designated as Common Stock; however, the number of authorized
preferred shares shall remain at 5,000,000 and shall not change or
increase;
4. That each share of Common Stock existing at the effective time of
the Increase shall thereupon be increased in number and changed into FIVE
(5) shares of Common Stock, and that following the Increase, each holder of
issued and outstanding Common Stock in the Company shall receive FIVE (5)
shares of Common Stock for every share of Common Stock held by such holder
prior to the effective time of the Increase;
5. That no fractional Common Shares shall be issued as a result of
the Increase; and every fractional share resulting shall be rounded up to
the nearest whole number as permitted by N.R.S. 78.205(2)(b);
6. That the Increase of authorized shares of Common Stock and the
means by which the Increase shall be effected have been duly and properly
authorized and resolved by the Company's Board of Directors pursuant to a
unanimous written consent dated July 5, 1996, and that the transactions
described herein do not require shareholder approval pursuant to NRS
78.207(1);
7. That the Increase in the number of authorized shares of the
Company's Common Stock shall be effective on the date this Certificate is
filed with the Office of the Secretary of State of the State of Nevada, as
provided by NRS 78.207(4)(f); and
8. That the Company's Articles of Incorporation shall be deemed
amended as provided in this Certificate on the date this Certificate is
filed with the Office of the Secretary of State of the State of Nevada, as
provided in NRS 78.207(4).
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Certificate of Increase to
be signed as of the date below by the persons indicated.
DATED: July 8, 1996 CHELSEA ATWATER, INC.
ATTEST: By: /s/ John D. Brasher Jr.
-------------------------------------
John D. Brasher Jr., President
By: /s/ Mark T. Cooper
-------------------------------------
Mark T. Cooper, Ass't Secretary
ACKNOWLEDGMENT
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
I HEREBY CERTIFY that before me, a Notary Public duly commissioned and
qualified in and for the above jurisdiction, personally came and appeared
JOHN D. BRASHER JR., the President of CHELSEA ATWATER, INC., who after being
duly sworn declared that he executed the foregoing Certificate of Increase as
his free act and deed and that the statements therein set forth are true and
correct.
IN WITNESS WHEREOF, I have hereunto set my hand and seal on July 8, 1996.
X: /s/ Elisabeth M. Crosse
-------------------------------------
Notary Public
<PAGE>
Exhibit 10.5 to Form 8-K dated July 12, 1996 File No. 0-25022
-------------------------------------------- ----------------
O P T I O N T O P U R C H A S E
Option to Purchase dated this 26th day of June, 1996, among CASINO CASINO
PLC, a company organized in the Island of Nevis under Section 4(6) of the Nevis
Business Corporation Ordinance 1984, as amended, whose address is P.O. Box 556,
Main Street, Charlestown, Nevis ("CasinoCorp"); and E.V.A. LIMITED, a limited
liability company organized in St. Vincent and the Grenadines under the
provisions of the Companies Act, Chapter 219, whose address is c/o Casino
Peniston, Peniston Valley, St. Vincent and the Grenadines ("EVA");
WITNESSETH:
A. West Indies Casinos and Consultants Limited, a limited liability
company organized in St. Vincent and the Grenadines under the provisions of the
Companies Act, Chapter 219 ("Landlord"), owns in fee simple that certain
property described as all that part or portion of the main building situated at
the town of Peniston, on a portion of the Peniston Estate in the Parish of St.
Andrew in the State of St. Vincent and the Grenadines, being the portion of the
buildings there situated known as the Emerald Valley Resort and Casino in which
a gambling casino is operated known as "Casino Peniston", including the bar area
lounge, rooms, restrooms, office and the generator room, and including all
gaming table apparatus, cutlery, furniture, fixtures and equipment
(collectively, the "Casino Premises"), together with the immediate curtilage and
the front gardens and lawn and the first buildings which contain Chalets 7/8,
9/10, and 11/12, including all furniture, fixtures, equipment and bedding. All
such premises, including the Casino Premises, are hereinafter referred to as the
"Demised Premises."
B. Emerald Isle Casino Limited, a limited liability company organized in
St. Vincent and the Grenadines under the provisions of the Companies Act,
Chapter 219 ("Emerald Isle"), holds a valid gaming license granted under the
relevant laws of St. Vincent and the Grenadines to operate a casino and gaming
operations on the Casino Premises (the "License").
C. Pursuant to that certain Lease dated December 31, 1994, among Landlord,
Emerald Isle and San Jose Group, an unincorporated partnership of Thomas Evans
and Richard C. Ayers ("San Jose Group"), the San Jose Group was granted a lease
of (i) the Demised Premises generally and of the Casino Premises specifically,
and (ii) the License itself and all right of Emerald Isle to operate a casino or
gaming operations on the Casino Premises or elsewhere pursuant to the License,
all for six (6) one-year periods commencing with the year beginning on February
1, 1995 and ending January 31, 1996, and for the five (5) succeeding one-year
periods thereafter, ending on January 31, 2000 (the "Premises and Casino
Lease").
D. San Jose Group has, by instrument dated February 1, 1995, assigned all
of its rights whatever in, to and under the Premises and Casino Lease to EVA
(the "Lease Assignment").
E. CasinoCorp wishes to obtain an option to purchase from EVA for cash all
of the issued and outstanding shares (equity membership interests) of EVA,
except as may be required by law or otherwise to be retained by citizens or
residents of St. Vincent and the Grenadines, or alternatively, to purchase for
the same amount a direct assignment of the Premises and Casino Lease.
NOW, THEREFORE, for and in consideration of the sum of US$10.00 cash paid
in hand, the receipt and sufficiency of which both parties acknowledge, the
parties covenant as follows:
SECTION 1. GRANT OF OPTION.
On the terms and subject to the conditions of this Agreement, EVA hereby
grants to CasinoCorp an option (the "Option") to purchase, for the sum of
US$500,000.00 in lawful monies of the United States of America, paid in cash
(the "Exercise Price"), a direct assignment by EVA of the Premises and Casino
Lease, to be evidenced by a written form of assignment and such other
documentation as shall be necessary or customary under island law or as required
by island
<PAGE>
counsel, which shall include all rights whatever to the Demised Premises and to
operate the casino on the Casino Premises. Alternatively, for such cash payment,
CasinoCorp shall purchase all of the issued and outstanding shares of capital
stock of EVA, excepting such nominal number of those shares as may be required
by law or otherwise to be retained by citizens or residents of St. Vincent and
the Grenadines (the "Option Shares"). The parties acknowledge that the share
capital of EVA consists of 50,000 shares, $1.00 each. EVA shall use its best
efforts to obtain the signatures upon this Agreement of all holders of Option
Shares. The Option Shares shall not be subject to any preemptive rights, options
or similar rights on the part of any shareholder or creditor of EVA or any other
person. EVA, and/or the registered shareholders of EVA, as the case may be,
shall be responsible for any sales, income or other taxes or charges payable by
them in respect of the assignment of the Premises and Casino Lease or the sale
of the Option Shares.
Unless sooner terminated by law or by its own terms, this Option shall be
binding and irrevocable for the period commencing on the effective date of this
Agreement and ending on 5:00 o'clock PM (Eastern Time) on the date which is
exactly eighteen (18) months later (the "Option Period").
In the event that CasinoCorp exercises this Option by purchasing the Option
Shares, at the closing of the purchase all certificates evidencing the Option
Shares shall be delivered to CasinoCorp, each duly endorsed by the registered
holder with signature duly witnessed, or together with a stock assignment duly
signed by the registered holder with signature medallion guaranteed or notarized
and, if the holder is a corporation or other entity, a corporate resolution or
other documentation evidencing the presenter's authority to sell and deliver the
shares.
SECTION 2. MANNER OF EXERCISE.
CasinoCorp may only exercise this Option by written notice to EVA delivered
by facsimile or in the form of hard copy to Managing Director at the Casino
Premises, to such other person or address as EVA shall later advise in writing.
Upon EVA's receipt of the exercise notice, the parties shall as promptly as
possible arrange a date, time and place for the closing. So long as EVA receives
such notice within the Option Period, this Option shall continue in effect so
long as the parties work in good faith to accomplish the closing and shall be
extended automatically upon the giving of such notice for such period as is
necessary to accomplish the closing or for EVA to deliver schedules or documents
requested or required hereunder.
SECTION 3. CLOSING MATTERS.
The closing of all transactions herein contemplated shall take place at a
date, time and place to be agreed upon by the parties. At the closing,
CasinoCorp shall deliver payment of the Exercise Price by means of cashier's or
bank check, money order, or certified check, or wire transfer.
SECTION 4. OFFICERS AND DIRECTORS OF EVA.
CasinoCorp shall have the sole right to decide and designate who shall be
the officers and directors of EVA following consummation of a purchase of the
Option Shares. Effective at Closing of a purchase of the Option Shares, all
officers and directors of EVA shall at the request of CasinoCorp deliver to
CasinoCorp their originally signed resignations from such positions. The persons
designated by CasinoCorp shall be elected to the Board of Directors of EVA and
shall be elected to such officer positions of EVA as CasinoCorp shall specify.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF EVA.
EVA hereby represents and warrants to CasinoCorp that the following are
true and correct as of the date hereof and will be true and correct through the
closing date as if made on that date:
(a) EVA is a limited liability company duly organized, validly
existing and in good standing under the provisions of the Companies Act,
Chapter 219, of St. Vincent and the Grenadines, with all requisite power and
authority to carry on the business in which it is engaged, to operate Casino
Peniston under the Casino License, to have and hold the Premises and Casino
Lease in accordance with its terms.
<PAGE>
(b) As of the effective date of this Agreement, the authorized capital
stock of EVA consists of 50,000 shares of stock, $1.00 each, of which 50,000
shares are issued and outstanding, all of which are validly issued, fully paid
and nonassessable. CasinoCorp shall be given a current list of the registered
holders of all such outstanding shares and the number of shares held by each. No
shares of preferred stock are authorized. EVA is not a party to or bound by any
agreement, option, warrant or other instrument, arrangement, contract,
obligation, commitment or understanding of any character, whether written or
oral, express or implied, whereby EVA is bound to issue shares of its capital
stock or any instrument or right convertible into or exchangeable for its
capital stock. EVA has in effect no pension, profit-sharing or similar plan.
(c) There are no claims, actions, suits, proceedings or investigations
of any kind pending or threatened against or affecting EVA or any of its
properties or assets or business anywhere in the world.
(d) EVA has complied in all material respects with the Premises and
Casino Lease and the Casino License and all applicable laws, regulations and
rules, applicable to its business or properties.
(e) Prior to the Closing, EVA shall have furnished to CasinoCorp
copies of EVA's unaudited Balance Sheets, Statements of Income and Expense,
Statements of Cash Flows, Statement of Changes in Financial Position and
Statement of Shareholders' Equity for such periods as reasonably requested.
(f) All taxes, assessments and other charges owing to St. Vincent and
the Grenadines or to any taxing authority therein at the time of closing shall
have been paid or shall be deducted from the Exercise Price and all applicable
tax returns properly filed.
(g) EVA shall provide a schedule of all movable property (personal
property) it owns, all other property it owns, and all property of which it has
use under the Premises and Casino Lease or the Casino License.
(i) EVA shall provide a listing of all contracts to which it is a
party other than the Premises and Casino Lease. With respect to each such
contract, except as disclosed in writing to CasinoCorp (i) EVA is not in
default, (ii) the contract is legal, valid, binding, in full force and effect
and enforceable in accordance with its terms, and (iii) the contract will
continue after the Closing to be legal, valid, binding, in full force and effect
in accordance with its terms.
(j) EVA shall provide a schedule and description of all policies of
insurance (type of policy, coverage amounts, deductibles, etc.) of EVA in force.
All such policies shall be in force at the time of the Closing.
(k) EVA is not indebted to any officer, director, employee or
shareholder thereof as of the date of this Agreement, and no money or property
is owed to EVA by any officer, director, employee or shareholder thereof, except
as disclosed in writing to CasinoCorp.
(l) EVA shall provide a schedule of the annual rate of compensation
(including benefits) of all full-time employees of EVA. There is no obligation,
commitment or past repetitive historical practice of EVA to pay bonuses,
royalties or other similar compensation designed to reward past performance,
create incentive for future performance or otherwise to any director or officer
or other employee of EVA except as set forth on this schedule.
(m) The execution, delivery and performance by EVA of this Agreement
and any other agreements contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
requisite corporate action EVA. This Agreement and any other agreement
contemplated hereby have been or will be as of the Closing Date duly executed
and delivered by EVA and constitutes and will constitute legal, valid and
binding obligations of EVA, enforceable against it in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies.
(n) No consent, approval, authorization or order of any court, or
other agency or authority of St. Vincent and the Grenadines is required for EVA
to consummate this Agreement.
<PAGE>
(o) EVA does not have any powers of attorney, general or special, or
similar instruments or empowerments outstanding.
(p) The Casino and Premises Lease was duly executed and consummated
and was duly approved by all requisite corporate action of Landlord and Emerald
Isle and is in full force and effect and is not in default in any way. The Lease
Assignment was duly executed and consummated, and EVA obtained thereunder a
valid and legal assignment of all rights whatever of San Jose Group and San
Jose Group's partners in, to and under the Premises and Casino Lease. Further,
EVA is in full legal and actual possession of the Demised Premises and Casino
Premises and is operating Casino Peniston in accordance with the License.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF CASINOCORP.
CasinoCorp hereby represents and warrants to EVA that the following are
true and correct as of the date hereof and will be true and correct through the
closing date as if made on that date:
(a) CasinoCorp is a company duly organized, validly existing and in
good standing in the Island of Nevis under Section 4(6) of the Nevis Business
Corporation Ordinance 1984, as amended, with all requisite power and authority
to operate Casino Peniston under the Casino License, to have and hold the
Premises and Casino Lease in accordance with its terms. CasinoCorp has not
previously had operations of any kind and has no material assets or liabilities.
(b) There are no claims, actions, suits, proceedings or investigations
of any kind pending or threatened against or affecting CasinoCorp anywhere in
the world.
SECTION 7. ASSIGNMENT.
CasinoCorp may assign this Option without EVA's prior consent to Chelsea
Atwater, Inc., a Nevada corporation, and shall give EVA at least thirty (30)
days' written notice thereof prior to the effectiveness of such assignment. This
Option shall be exercisable in accordance with its terms by any permitted
successor or assignee or legal representative of CasinoCorp. EVA may not assign
or transfer any of its obligations or duties hereunder.
SECTION 8. MISCELLANEOUS PROVISIONS.
(a) This Option shall be binding upon the parties, and respective
successors, assigns and legal representatives and shall be governed and
interpreted under the laws of St. Vincent and the Grenadines. This Agreement
shall be interpreted as if all parties shared equally in its drafting and
preparation.
(b) This Option shall terminate only upon due exercise of this Option
and sale and delivery of the Option Shares, assignment and delivery of the
Premises and Casino Lease or expiration of the Option Period. The right of
CasinoCorp to exercise this Option is not contingent on any fact, event, thing
or person whatsoever other than timely exercise and payment of the Exercise
Price.
(c) The parties agree to conduct themselves and their mutual dealings
in connection with this Agreement in accordance with the highest standards of
commercial honor.
(d) This Agreement and the agreements contemplated hereby constitute
the entire agreement of the parties regarding the subject matter hereof, and
supersede all prior agreements and understandings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof.
(e) If any provision of this Agreement is held to be illegal, invalid
or unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Further, in lieu of such
illegal, invalid or unenforceable provision, there shall be
<PAGE>
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid and enforceable.
(f) The parties shall bear their own fees and expenses incurred in
connection with the transactions contemplated herein.
(g) This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument. Execution and delivery of this Agreement by
exchange of facsimile copies bearing facsimile signature of a party shall
constitute a valid and binding execution and delivery of this Agreement by such
party. Such facsimile copies shall constitute enforceable original documents.
IN WITNESS WHEREOF, the parties have executed this Option to Purchase, and
initialled each preceding page hereof, on the date first above indicated.
CASINO CASINO PLC: E.V.A. LIMITED:
By: /s/ Michael Ryan By: /s/ Thomas Evans
---------------------------------- -----------------------------------
Authorized Officer Managing Director
<PAGE>
Exhibit 10.6 to Form 8-K dated July 12, 1996 File No. 0-25022
-------------------------------------------- ----------------
M A N A G E M E N T A G R E E M E N T
Management Agreement dated this 26th day of June, 1996, among CASINO CASINO
PLC, a company organized in the Island of Nevis under Section 4(6) of the Nevis
Business Corporation Ordinance 1984, as amended, whose address is P.O. Box 556,
Main Street, Charlestown, Nevis ("Manager"); and E.V.A. LIMITED, a limited
liability company organized in St. Vincent and the Grenadines under the
provisions of the Companies Act, Chapter 219, whose address is c/o Casino
Peniston, Peniston Valley, St. Vincent and the Grenadines ("EVA").
WITNESSETH:
A. West Indies Casinos and Consultants Limited, a limited liability
company organized in St. Vincent and the Grenadines under the provisions of the
Companies Act, Chapter 219 ("Landlord"), owns in fee simple that certain
property described as all that part or portion of the main building situated at
the town of Peniston, on a portion of the Peniston Estate in the Parish of St.
Andrew in the State of St. Vincent and the Grenadines, being the portion of the
buildings there situated known as the Emerald Valley Resort and Casino in which
a gambling casino is operated known as "Casino Peniston", including the bar area
lounge, rooms, restrooms, office and the generator room, and including all
gaming table apparatus, cutlery, furniture, fixtures and equipment
(collectively, the "Casino Premises"), together with the immediate curtilage and
the front gardens and lawn and the first buildings which contain Chalets 7/8,
9/10, and 11/12, including all furniture, fixtures, equipment and bedding. All
such premises, including the Casino Premises, are hereinafter referred to as the
"Demised Premises."
B. Emerald Isle Casino Limited, a limited liability company organized in
St. Vincent and the Grenadines under the provisions of the Companies Act,
Chapter 219 ("Emerald Isle"), holds a valid gaming license granted under the
relevant laws of St. Vincent and the Grenadines to operate a casino and gaming
operations on the Casino Premises (the "License").
C. Pursuant to that certain Lease dated December 31, 1994, among Landlord,
Emerald Isle and the San Jose Group, an unincorporated partnership of Thomas
Evans and Richard C. Ayers ("San Jose Group"), as tenant, the San Jose Group was
granted a lease of (i) the Demised Premises generally and of the Casino Premises
specifically, and (ii) the License itself and all right of Emerald Isle to
operate a casino or gaming operations on the Casino Premises or elsewhere
pursuant to the License, all for six (6) one-year periods commencing with the
year beginning on February 1, 1995 and ending January 31, 1996, and for the five
(5) suceeding one-year periods thereafter, ending on January 31, 2000 (the
"Premises and Casino Lease").
D. San Jose Group has, by instrument dated February 1, 1995, assigned to
EVA all of its rights whatever in, to and under the Premises and Casino Lease
(the "Lease Assignment").
E. Manager wishes to obtain the sole and exclusive right to manage the
sports betting portion of the casino business of Casino Peniston on the terms
herein.
NOW, THEREFORE, for and in consideration of the sum of US$10.00 cash paid
in hand, the receipt and sufficiency of which both parties acknowledge, the
parties covenant as follows:
1. Appointment of Manager. As of the effective date of this Agreement,
EVA hereby appoints Manager during the term of this Agreement as the sole and
exclusive manager for the purposes of operating and managing the sports betting
portion of the casino business carried on by EVA at Casino Peniston pursuant to
the Casino License (the "Sportsbook"), and Manager accepts such appointment.
More specifically, the Sportsbook EXCLUDES all table games (such as poker,
craps, blackjack, roulette), slot machines, video poker and blackjack machines,
and INCLUDES all betting on and off the Casino Premises by whatever means
directed to and received by the Casino Peniston made on horse, dog and other
racing events and all sporting and other events occurring outside the Casino
Premises. The Sportsbook includes the right to handle betting action coming into
Casino Peniston by telephone, telegraph, electronic mail, facsimile
<PAGE>
transmission or other electronic and non-electronic means, and by any and every
means now or later technologically possible, and specifically includes betting
made over the Internet or similar technology. However, notwithstanding the
foregoing language, the Sportsbook shall not include any horse racing in the
country of Trinidad and Tobago, which EVA may book and handle separate and apart
from Sportsbook activities.
Manager shall determine and notify EVA in advance of the date upon which
Manager shall actually assume managerial and operational control of the
Sportsbook. EVA shall continue to manage the Sportsbook in the ordinary course
of business until such time.
2. Term. This Management Agreement shall expire on the date which is
eighteen (18) months from its effective date, unless sooner terminated by its
own terms or terminated by law. The parties acknowledge that they have executed
that certain Option to Purchase of even date herewith, pursuant to which Manager
has acquired the right during such period to purchase either an assignment of
the Premises and Casino Lease or to purchase a portion of the issued and
outstanding shares of capital stock of EVA (the "Option"). Upon Manager's (or an
assignee's) due exercise of the Option and closing thereon, this Management
Agreement shall expire automatically, without need of further action by any
person whatsoever.
3. Manager's Responsibilities.
(a) Manager agrees to operate and manage the Sportsbook and conduct
the day-to-day activities and necessary functions of the Sportsbook in
accordance with the terms of the Casino License and in compliance with all
applicable laws, rules and regulations of St. Vincent and the Grenadines and its
political subdivisions and to conduct the Sportsbook operations in accordance
therewith; except that, if the Sportsbook is not now being conducted in
accordance with such laws, rules and regulations, Manager shall have a
reasonable period in which to attain such compliance. If the lack of legal
compliance is due to any non-Sportsbook operations over which Manager shall have
no control, then Manager shall have no responsibility regarding such non-
compliance except to work with EVA in good faith, as requested by EVA, to
resolve the problem.
(b) Manager shall at its cost construct or install any facilities,
equipment or technology it desires which is deemed necessary by Manager in its
sole judgment in order to continue or to improve or expand the operations,
flexibility or capability of the Sportsbook; and shall coordinate with EVA in
advance any such construction or installation activities. EVA consents in
advance to any such constructions or installations which are not obtrusive or
demanding of a materially greater amount of space than currently utilized by
sports betting operations.
(c) Manager may at its sole election accept Sportsbook wagers over
telephone lines from anywhere in the world and may establish a gaming facility
on the World Wide Web or elsewhere on the Internet to publicize the Sportsbook,
allow Sportsbook wagers to be made from anywhere in the world and for such other
purposes as are lawful under the laws of St. Vincent and the Grenadines and
consistent with the Casino License. This provision shall not be interpreted to
limit Manager's right to operate or publicize the Sportsbook.
(d) Maintain at Manager's expense all existing furniture, fixtures,
equipment and facilities now or hereafter relating to the Sportsbook and make
all necessary repairs and replacements and monitor all systems relating to the
Sportsbook.
(e) Manager shall arrange for all telephone and similar services
relating to the Sportsbook and for Sportsbook personnel to be in the name of
Manager and billed to Manager, and Manager shall be responsible for payment of
all such obligations.
(f) Manager shall reimburse EVA for all physical damages and pay the
cost of all repairs to the Casino Premises or Demised Premises made necessary by
Manager's operations or by Sportsbook patrons.
(g) Collect all wagers and make all payments required to winning
bettors and pay all bills, debts and obligations of or relating to the
Sportsbook arising after Manager assumes actual managerial control or due to
actions of Manager.
<PAGE>
(h) Maintain accurate books and records of Sportsbook activities,
including wagers and other sources of revenues, winner payouts and other
expenses, and render to EVA or its successor a monthly accounting, which shall
be unaudited, reflecting gross revenues, payouts to winning bettors and net
revenues for the preceding month.
(i) Market and promote the Sportsbook by any lawful means, including
but limited to the Internet and other electronic means.
(j) Handle and respond to complaints by Sportsbook bettors, other
casino patrons, regulatory authorities and others reasonably relating to the
Sportsbook.
4. Payments to EVA. During the term of this Agreement, Manager shall pay
to EVA the following sums:
(a) On or before October 1, 1996, a one-time payment of Fifty Thousand
Dollars (US$50,000.00), irrespective of when Manager actually commences
management and operations of the Sportsbook; and
(b) Commencing on October 1, 1996, a monthly payment of Three Thousand
Dollars (US$3,000.00), payable each month on the first of the month during the
term of this Agreement, it being further agreed that Manager shall have during
the term of this Agreement the exclusive use of Emerald Valley Resort Chalets
9/10 and 11/12, and this monthly payment shall cover and include incidental
charges relating to Sportsbook operations, and power, water, groundskeeping,
maid service, linen laundry service and the like relating to the two chalets.
No further regular monthly or other payment or percentages of gross or net
revenues shall be due or payable.
5. Closing. The closing of this Agreement shall take place at a date,
time and place to be agreed upon by the parties.
6. Other Agreements.
(a) Force Majeure. Manager shall not be liable for delays in
performance or failure to perform its duties hereunder if and to the extent such
failure results from the occurrence of any contingency beyond the reasonable
control of Manager, including but not limited to strike or other labor
disturbance, delays in transportation, inability to obtain necessary materials,
components, facilities or services, acts or failures to act of EVA, Landlord,
Emerald Isle, San Jose Group, riot, theft, flood, lightning, storm, any act of
God, power failure, war or insurrection, national emergency, interference by any
government or governmental agency, embargo, seizure, or the enactment of any
law, statute, ordinance, rule or regulation.
(b) Insurance. EVA agrees that it will during the term of this
Agreement maintain adequate and appropriate comprehensive public liability,
casualty and property damage insurance with respect to the Casino Premises.
(c) Limitation of Liability. Neither party, whether as a result of
breach of contract, warranty, tort (including negligence) or otherwise, shall
have any liability for incidental or consequential damages, including, but not
limited to, loss of profit or revenues, loss of use of any facilities or
equipment, cost of capital, cost of products, facilities or services, or
downtime costs. No action shall be brought for any breach of this Agreement more
than one year after the accrual of such cause of action.
(d) Damages Caused by EVA. EVA shall reimburse Manager for all
physical damages or pay the costs of all repairs to Sportsbook facilities caused
by EVA personnel or non-Sportsbook patrons.
7. Termination. This Agreement shall terminate:
(a) (i) By mutual written agreement of the parties;
(ii) Upon the expiration of this Agreement's term without any
renewal or extension or upon the failure of Manager to
timely pay the one-time payment of US$50,000.00;
<PAGE>
(iii) Upon the proper exercise of the Option;
(iv) Upon the termination or cessation of the License or the
failure or termination of the Premises and Casino Lease.
(b) Upon termination of this Agreement, Manager shall take possession
of any furniture, fixtures, equipment and facilities installed by it in the
Casino Premises or related to the Sportsbook, and for this purpose may enter
upon the site and remove the equipment without any liability for suit, action or
other proceeding by EVA.
8. Representations and Warranties of EVA. EVA hereby represents and
warrants to Manager that the following are true and correct as of the date
hereof and will be true and correct through the closing date as if made on that
date:
(a) EVA is a limited liability company duly organized, validly
existing and in good standing under the provisions of the Companies Act, Chapter
219, of St. Vincent and the Grenadines, with all requisite power and authority
to carry on the business in which it is engaged, to operate Casino Peniston
under the Casino License, to have and hold the Premises and Casino Lease in
accordance with its terms. EVA is eligible to operate and is operating the
Casino in accordance with applicable laws, rules and regulations of St. Vincent
and the Grenadines.
(b) There are no claims, actions, suits, proceedings or investigations
of any kind pending or threatened against or affecting EVA or any of its
properties or assets or business anywhere in the world.
(c) EVA has complied in all material respects with the Premises and
Casino Lease and the Casino License and all applicable laws, regulations and
rules, applicable to its business or properties.
(d) All taxes, assessments and other charges owing to St. Vincent and
the Grenadines or to any taxing authority therein at the time of closing which
relate to the Sportsbook shall have been paid or shall be deducted from payments
due to EVA, and all applicable tax returns have been properly filed.
(e) The execution, delivery and performance by EVA of this Agreement
and any other agreements contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
requisite corporate action EVA. This Agreement and any other agreement
contemplated hereby have been or will be as of the Closing Date duly executed
and delivered by EVA and constitutes and will constitute legal, valid and
binding obligations of EVA, enforceable against it in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies.
(f) No consent, approval, authorization or order of any court, or
other agency or authority of St. Vincent and the Grenadines or any other person
whatever is required for EVA to execute, deliver or consummate this Agreement.
(g) No other person or entity has been granted authority of any kind
to operate the Sportsbook or other authority which would or might interfere with
Manager's rights hereunder, and the Sportsbook is not subject to any liens,
security interests or encumbrances or claims of third parties other than the
rights of Landlord and Emerald Isle.
9. Representations and Warranties of Manager. Manager hereby represents
and warrants to EVA that the following are true and correct as of the date
hereof and will be true and correct through the closing date as if made on that
date:
(a) Manager is a company duly organized, validly existing and in good
standing in the Island of Nevis under Section 4(6) of the Nevis Business
Corporation Ordinance 1984, as amended, with all requisite power and authority
to operate Casino Peniston under the Casino License, to have and hold the
Premises and Casino Lease in accordance with its terms. Manager has not
previously had operations of any kind and has no material assets or liabilities.
<PAGE>
(b) There are no claims, actions, suits, proceedings or
investigations of any kind pending or threatened against or affecting Manager
anywhere in the world.
10. Assignment. Manager may assign its rights and responsibilities under
this Agreement without EVA's prior consent to Chelsea Atwater, Inc., a Nevada
corporation, and shall give EVA at least thirty (30) days' written notice
thereof prior to the effectiveness of such assignment.
11. Miscellaneous Provisions. (a) This Agreement shall be binding upon
the parties, and respective successors, assigns and legal representatives and
shall be governed and interpreted under the laws of St. Vincent and the
Grenadines. This Agreement shall be interpreted as if all parties shared equally
in its drafting and preparation.
(b) The parties agree to conduct themselves and their mutual dealings
in connection with this Agreement in accordance with the highest standards of
commercial honor.
(c) This Agreement and the agreements contemplated hereby constitute
the entire agreement of the parties regarding the subject matter hereof, and
supersede all prior agreements and understandings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof.
(d) If any provision of this Agreement is held to be illegal, invalid
or unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Further, in lieu of such
illegal, invalid or unenforceable provision, there shall be added automatically
as part of this Agreement a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible and be legal, valid and
enforceable.
(e) The parties shall bear their own fees and expenses incurred in
connection with the transactions contemplated herein.
(f) This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument. Execution and delivery of this Agreement by
exchange of facsimile copies bearing facsimile signature of a party shall
constitute a valid and binding execution and delivery of this Agreement by such
party. Such facsimile copies shall constitute enforceable original documents.
(g) The failure of either party to insist, in any one or more
instances, upon the performance of any of the terms, covenants or conditions
herein or to exercise any right hereunder shall not be construed as a waiver or
relinquishment of the right in the future to insist upon full performance of
such term, covenant or condition.
IN WITNESS WHEREOF, the parties have executed this Management Agreement,
and initialled each preceding page hereof, on the date first above indicated.
CASINO CASINO PLC: E.V.A. LIMITED:
By: /s/ Michael Ryan By: /s/ Thomas Evans
------------------------------- ------------------------------
Authorized Officer Managing Director
<PAGE>
Exhibit No. 10.7 to Form 8-K dated July 12, 1996 File No. 0-25022
------------------------------------------------ ----------------
A S S E T P U R C H A S E A G R E E M E N T
This Asset Purchase Agreement ("Agreement") is made and entered into this
July 12, 1996 by and among CASINO CASINO PLC, a company organized in the Island
of Nevis under Section 4(6) of the Nevis Business Corporation Ordinance 1984, as
amended, whose address is P.O. Box 556, Main Street, Charlestown, Nevis, as the
Seller (the "Seller"); and CHELSEA ATWATER, INC., a Nevada corporation whose
address is 90 Madison, Suite 707, Denver, Colorado 80206, as Purchaser
("Chelsea").
RECITALS:
A. West Indies Casinos and Consultants Limited, a limited liability
company organized in St. Vincent and the Grenadines under the provisions of the
Companies Act, Chapter 219 ("Landlord"), owns in fee simple that certain
property described as all that part or portion of the main building situated at
the town of Peniston, on a portion of the Peniston Estate in the Parish of St.
Andrew in the State of St. Vincent and the Grenadines, being the portion of the
buildings there situated known as the Emerald Valley Resort and Casino in which
a gambling casino is operated known as "Casino Peniston", including the bar area
lounge, rooms, restrooms, office and the generator room, and including all
gaming table apparatus, cutlery, furniture, fixtures and equipment
(collectively, the "Casino Premises"), together with the immediate curtilage and
the front gardens and lawn and the first buildings which contain Chalets 7/8,
9/10 and 11/12, including all furniture, fixtures, equipment and bedding. All
such premises, including the Casino Premises, are hereinafter referred to as the
"Demised Premises."
B. Emerald Isle Casino Limited, a limited liability company organized in
St. Vincent and the Grenadines under the provisions of the Companies Act,
Chapter 219 ("Emerald Isle"), holds a valid gaming license granted under the
relevant laws of St. Vincent and the Grenadines to operate a casino and gaming
operations on the Casino Premises (the "License").
C. Pursuant to that certain Lease dated December 31, 1994, among Landlord,
Emerald Isle and the San Jose Group, an unincorporated partnership of Thomas
Evans and Richard C. Ayers ("San Jose Group"), as tenant, the San Jose Group was
granted a lease of (i) the Demised Premises generally and of the Casino Premises
specifically, and (ii) the License itself and all right of Emerald Isle to
operate a casino or gaming operations on the Casino Premises or elsewhere
pursuant to the License, all for six (6) one-year periods commencing with the
year beginning on February 1, 1995 and ending January 31, 1996, and for the five
(5) suceeding one-year periods thereafter, ending on January 31, 2000 (the
"Premises and Casino Lease").
D. San Jose Group has, by instrument dated February 1, 1995, assigned to
E.V.A. LIMITED, a limited liability company organized in St. Vincent and the
Grenadines under the provisions of the Companies Act, Chapter 219 ("EVA"), all
of its rights whatever in, to and under the Premises and Casino Lease (the
"Lease Assignment").
E. Pursuant to that certain Option to Purchase dated June 26, 1996,
between EVA and Seller, EVA granted to Seller an option for a period of eighteen
months (the "Option") to purchase, for the sum of US$500,000.00 in cash (the
"Exercise Price"), a direct assignment by EVA of the Premises and Casino Lease,
or alternatively, to purchase for such sum all of the issued and outstanding
shares of capital stock of EVA, excepting such nominal number of those shares as
may be required by law or otherwise to be retained by citizens or residents of
St. Vincent and the Grenadines (the "EVA Option Shares").
F. Pursuant to that certain Management Agreement dated June 26, 1996,
between EVA and Seller ("Management Agreement"), EVA appointed Seller for an
eighteen-month period as the sole and exclusive manager for the purposes of
operating and managing the sports betting portion of the casino business carried
on by EVA at Casino Peniston pursuant to the Casino License (the "Sportsbook").
<PAGE>
G. WHEREAS, Chelsea desires to buy from Seller, and Seller desires to
sell and assign to Chelsea, or a wholly owned subsidiary of Chelsea, upon the
terms and subject to the conditions of this Agreement, all of Seller's rights
and obligations under the Management Agreement and Option.
H. WHEREAS, the respective boards of directors of Chelsea and Seller
have approved the execution of this Agreement and performance of their
respective obligations hereunder.
NOW THEREFORE, for and in consideration of the mutual promises and
covenants contained herein, and for other good and valuable consideration, and
subject to the terms and conditions of this Agreement, the parties hereto agree
as follows:
1. PURCHASE AND SALE.
1.01 Assets to be Sold and Purchased. (a) Subject to and upon the terms
and conditions of this Agreement, at the closing Seller shall sell, transfer,
assign, convey and deliver to Chelsea or Chelsea's wholly owned subsidiary, free
and clear of all adverse claims, security interests, liens, claims and
encumbrances (other than as specifically agreed to herein by Chelsea), and
Chelsea or its subsidiary shall purchase, accept and acquire from Seller, all of
Seller's rights and obligations under the Option and Management Agreement (the
"Assets") except the retained interest described below. This purchase and sale
transaction is sometimes referred to herein as the "Purchase". Chelsea shall
receive good and merchantable title to the Assets. In full payment for the
Assets, Chelsea shall sell, issue and deliver to Seller the following
securities:
(i) 239,007 shares of the authorized but heretofore unissued common
stock of Chelsea, $.001 par value per share (the "Exchange Shares"); and
(ii) options (the "Exchange Options") to purchase an aggregate of
900,000 shares of the authorized but heretofore unissued common stock of
Chelsea, $.001 par value per share (the "Exchange Option Shares"), as more
particularly described below:
(A) Options to purchase 300,000 shares, exercisable from the
date of issuance through July 7, 1999 at a price of US$2.50 per
share, subject to adjustment; and
(B) Options to purchase 300,000 shares, exercisable from the
date of issuance through July 7, 2001 at a price of US$5.00 per
share, subject to adjustment; and
(C) Options to purchase 300,000 shares, exercisable from the
date of issuance through July 7, 2002 at a price of US$10.00 per
share, subject to adjustment.
(b) In order to exercise the Exchange Options, holders thereof shall
be required, unless waived by the Company, to give the Company not less than
sixty-five (65) days' written notice prior to such exercise. Otherwise, any
attempted exercise shall be effective only upon the earlier of (i) 65 days from
the date the exercising holder originally notified the Company in writing of his
intent to exercise, or (ii) if the holder gave no prior notice of intent to
exercise to the Company, 65 days from the date of the Company's receipt of the
exercise, which shall be treated as the required notice and shall not be
effective as an exercise until the lapse of the 65-day period from the Company's
receipt thereof.
(c) The number of Exchange Option Shares purchasable upon exercise
of any Exchange Options will be subject to adjustment if the Company is
reorganized, merged, consolidated or party to a plan of exchange with another
corporation pursuant to which shareholders of the Company receive any shares of
stock or other securities, or in the event of any sale or other transfer of all
or substantially all of the Company's assets, or in case of any reclassification
of Company's common stock. Holders of Exchange Options shall be entitled, after
the occurrence of any such event, to receive on exercise thereof the kind and
amount of shares of stock or other securities, cash or other property receivable
upon such event by a holder of the number of Common Shares issuable upon
exercise of the Exchange Option immediately prior to occurrence of the event. In
addition, the number of Exchange Option Shares issuable will be appropriately
adjusted if the Company's common stock is split or combined.
<PAGE>
(d) The Exchange Shares and Exchange Options together constitute the
entire Purchase Price and consideration payable for the Assets. Seller shall
execute under seal and deliver to Chelsea a formal assignment of the Option and
Management Agreement. The Exchange Shares shall not be subject to any preemptive
rights, options or similar rights on the part of any shareholder or creditor of
Chelsea or any other person. Seller acknowledges the sufficiency of the Purchase
Price. Seller acknowledges that the Purchase will not qualify as a tax-free
reorganization under the Internal Revenue Code of 1986, as amended, or
applicable tax laws of the Island of Nevis, and Seller shall be responsible for
any income or other taxes payable by it in respect of the sale of the Assets.
Upon consummation of the Closing, Seller shall have no further rights in or
claims as to the Assets and shall have only the rights of shareholders and
option holders of Chelsea.
1.02 Exchange Shares not Registered. (a) Seller acknowledges and agrees
that the Exchange Shares and Exchange Options have not been registered under the
Securities Act of 1933, as amended ("Act"), but are being sold and issued in
reliance upon exemptions from registration provided by Rule 903(c)(2) of
Regulation S under the Act, on the grounds that the Purchase does not involve
any offer or sale of the Exchange Shares, Exchange Options or Exchange Option
Shares within the United States of America or to any "U.S. Person", as defined
in Regulation S.
(b) It is intended that the Exchange Shares and Exchange Options
will be distributed by Seller to its shareholders of record, none of which is a
U.S. Person ("Shareholders"). Each Shareholder must acquire the Exchange Shares
and Exchange Options for his, her or its own account, with no intent to evade
the registration requirements of the Act. Each Shareholder shall be required,
prior to receiving any Exchange Shares or Exchange Options, to execute and
deliver to Chelsea a subscription agreement in customary form prepared by
Chelsea. The Exchange Shares and Exchange Options shall be subject to a 40-day
restricted period, which shall commence on the date that the offering of
Exchange Shares and Exchange Options is deemed to be completed; and during such
40-day restricted period, neither the Exchange Shares, Exchange Options nor any
Exchange Share Options may be offered or sold within the United States nor to
any U.S. Person.
1.03 No Restrictive Legend. Certificates evidencing Exchange Shares,
Exchange Options and Exchange Option Shares shall not bear any form of
investment or other legend.
1.04 Reservation of Retained Interest. Notwithstanding paragraph (a)
preceding or any other provision of this Agreement, Seller shall retain forever
and shall not be deemed to transfer as part of the Assets the right to eight
percent (8%) of the net revenues produced by the Sportsbook, as such term is
defined in the Management Agreement, and actually paid to and received by
Chelsea (the "Retained Interest"). The term "net revenues" means revenues to
Chelsea after payment or deduction of all payouts to winning bettors, all
expenses, charges and reserves, any other revenue interests granted by Chelsea
and any other revenue or net revenue burdens, such as payments to licensees. The
Retained Interest shall not affect or apply to any part of the operations of
Casino Peniston whatsoever other than Sportsbook operations thereof or apply to
any other operations or revenues of Chelsea whasotever.
1.05 Closing. Subject to the conditions precedent set forth herein, the
closing of all transactions herein contemplated ("Closing") shall occur at a
place and time and on a date established by mutual agreement of the parties.
This Agreement shall be effective and binding when signed by all parties.
1.06 Certain Filings. Seller acknowledges that Chelsea is subject to
the reporting and informational requirements of the Securities Exchange Act of
1934, as amended ("Exchange Act") and that certain filings with the U.S.
Securities and Exchange Commission ("Commission) may be necessary in relation to
the purchase of Assets. Seller further acknowledges that it will be required to
file with the Commission, within 10 days of issuance of the Exchange Shares, a
report of beneficial ownership on Form 3, unless the Exchange Shares and
Exchange Options are transferred as soon as possible to the shareholders of
Seller.
1.07 Continuing Obligation of Seller. The parties acknowledge and agree
that the purpose of this Agreement and related agreements is to irrevocably
convey and deliver to Chelsea all existing and potential rights of Seller under
the Option and Management Agreement. Seller therefore agrees to execute and
deliver to Chelsea such other or further agreements or instruments as may become
necessary to accomplish the intent of the parties herein.
<PAGE>
1.08 Consent of Shareholders. Should the consent of Seller's shareholders
be deemed for any reason be deemed necessary for the sale of the Assets, Seller
shall take such lawful steps as may be necessary to obtain such consent and
affirmatively represents and warrants to Chelsea that such consent has been
obtained informally and can be formally obtained without undue delay or expense.
2. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents
and warrants to Chelsea that the following are true and correct as of the date
hereof and will be true and correct through the Closing Date as if made on that
date:
(a) Seller is a company duly organized in the Island of Nevis under
Section 4(6) of the Nevis Business Corporation Ordinance 1984, as amended,
validly existing and in good standing under the provisions of such law, with all
requisite power and authority to carry on the business in which it is engaged,
to have and hold the Option and Management Agreement in accordance with their
respective terms. Seller is not a public company and its shares are not publicly
quoted or traded.
(b) As of the effective date of this Agreement, the authorized
capital stock of Seller consists of 20,000,000 shares of common stock, $.0001
each, of which 1,000,000 shares are issued and outstanding, all of which are
validly issued, fully paid and nonassessable. Chelsea shall be given a current
list of the registered holders of all such outstanding shares and the number of
shares held by each. No shares of preferred stock are authorized or outstanding.
(c) There are no claims, actions, suits, proceedings or
investigations of any kind pending or threatened against or affecting Seller or
any of its properties or assets or business anywhere in the world.
(d) The Option to Purchase and Management Agreement were duly
executed and consummated and were duly approved by all requisite corporate
action of EVA and are in full force and effect and are not in default in any
way.
(e) To the best of Seller's knowledge, EVA has complied in all
material respects with the Premises and Casino Lease and the Casino License and
all applicable laws, regulations and rules, applicable to the Demised Premises,
the Casino Premises and the business of Casino Peniston.
(f) No consent, approval, authorization or order of any court, or
other agency or authority of the Island of Nevis or of St. Vincent and the
Grenadines is required for Seller to execute, deliver or consummate this
Agreement or sell or deliver the Assets.
(g) All originals and/or copies of Seller's Memorandum of
Association and Articles of Association, each as amended to date, and all
minutes of meetings and written consents in lieu of meetings of shareholders,
directors and committees of directors of Seller, financial data, and any and all
other documents, material, data, files, or information which have been or will
be furnished to Chelsea, are and will be true, complete, correct and unmodified
originals and/or copies of such documents, information, data, files or material.
(h) Prior to the consummation of the proposed Purchase, the Seller
shall not, without the prior written consent of Chelsea, make or consent to any
changes in either the Option or Management Agreement.
(i) No shareholder of record or person known to Seller to be a
beneficial owner of Seller's capital stock or to have a beneficial ownership
interest in or to Seller's capital stock is a "U.S. Person" as such term is
defined in Rule 902(o) of Regulation S under the Act.
(j) The sale of the Assets will not constitute a sale of all or
substantially all of Seller's assets or constitute a "bulk sale" of Seller's
assets, and no prior or subsequent approval of the sale or delivery of the
Assets by Seller's shareholders will be necessary for any purpose.
(k) Seller agrees to make available to Chelsea access to any and all
corporate and financial files and records of Seller for inspection prior to
Closing.
<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF CHELSEA. Unless specifically stated
otherwise in this Agreement, Chelsea represents and warrants to Seller that the
following are true and correct as of the date hereof and will be true and
correct through the Closing Date as if made on that date.
(a) The Exchange Shares, Exchange Options and Exchange Option Shares
will be, when issued, validly issued, fully paid and nonassessable, the sale,
issuance and delivery thereof on the terms herein contemplated has been
authorized by all requisite corporate action of Chelsea, and that such shares
will not be be subject to any preemptive rights, options or similar rights on
the part of any shareholder or creditor of Chelsea or any other person.
(b) Chelsea is and on the Closing Date will be duly organized, validly
existing and in good standing under the laws of the State of Nevada, with all
requisite power and authority to carry on the business in which it is engaged,
to own the properties and assets it owns, and is duly qualified and licensed to
do business and is in good standing in all jurisdictions where the nature of its
business makes such qualification necessary.
(c) As provided in its Articles of Incorporation, the authorized
capital stock of Chelsea consists of 50,000,000 common shares, US$.001 par
value, of which 622,649 common shares have been issued and are outstanding; and
5,000,000 preferred shares, par value US$.001, none of which has been issued or
are outstanding.
(d) Except as disclosed in writing to Seller, Chelsea has no
outstanding warrants, options or similar rights to subscribe for or purchase
shares of its capital stock (nor any securities convertible into or exchangeable
for its capital stock), nor are there any other securities outstanding
convertible into or exchangeable for its common stock, and there are no
contracts or commitments pursuant to which any person may acquire or Chelsea may
become bound to issue any shares of its capital stock.
(e) There are no claims, actions, suits, proceedings or investigations
pending or threatened against or affecting Chelsea in any court or by or before
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or other instrumentality, domestic or foreign, or
arbitration tribunal or other forum. There are no judgments, decrees,
injunctions, writs, orders or other mandates outstanding to which Chelsea is a
party or by which it is bound or affected.
(f) Chelsea will provide to Seller Chelsea's audited balance sheet and
the other financial statements of Chelsea for such periods as Seller's
reasonably requests. All such statements shall fairly present the assets,
liabilities and financial condition of Chelsea as of the respective dates
thereof, and all shall have been prepared in conformity with generally accepted
accounting principles, consistently applied during the periods covered. For
purposes of this Agreement, such statements shall include all notes thereto.
(g) Chelsea has not incurred any liabilities or obligations whatever
(whether direct, indirect, accrued, contingent, absolute, secured or unsecured
or otherwise), which singly or in the aggregate are material to its assets,
operations or financial condition, except as reflected in Chelsea's financial
statements or disclosed in writing to Seller.
(h) All income, excise, unemployment, social security, occupational,
franchise and other taxes, duties, assessments or charges levied, assessed or
imposed upon Chelsea by the United States or by any state or municipal
government or subdivision or instrumentality thereof have been duly paid or
adequately provided for, and all required tax returns or reports concerning any
such items have been duly filed or will be so filed.
(i) The execution, delivery and performance by Chelsea of this
Agreement and any other agreements contemplated hereby, and the consummation of
the transactions contemplated hereby and thereby, have been duly authorized by
all requisite corporate action of Chelsea. This Agreement and any other
agreement contemplated hereby have been or will be as of the Closing Date duly
executed and delivered by Chelsea and constitutes and will constitute legal,
valid and binding obligations of Chelsea, enforceable against it in accordance
with their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. The approval of Chelsea's shareholders is
not necessary for Chelsea's execution and performance of this Agreement.
<PAGE>
(j) No consent, approval, authorization or order of any court or
governmental agency or other body is required for Chelsea to execute and perform
its obligations under this Agreement. Neither the execution, delivery,
consummation or performance of this Agreement shall conflict with, constitute a
breach of Chelsea's articles of incorporation and bylaws, as amended to date, or
any note, mortgage, indenture, deed of trust or other agreement of instrument to
which Chelsea is a party or by which it is bound nor, to the best of Chelsea's
knowledge and belief, any existing law, rule, regulation, or any decree of any
court or governmental department, agency, commission, board or bureau, domestic
or foreign, having jurisdiction over Chelsea.
(k) Chelsea is subject to the reporting and information requirements
of Section 13 of the Exchange Act, and is current in all filings required
thereunder.
(l) The execution and performance of this Agreement and compliance
with the provisions hereof will not violate, with or without giving notice
and/or the passage of time, any provisions of law applicable to Chelsea. All
statements made by Chelsea in this Agreement, or in any exhibit or schedule
hereto, or in any document or certificate executed and delivered herewith, are
true, correct and complete as of the date of this Agreement and will be so as of
the Closing Date. All copies of documents provided and to be provided by Chelsea
are and shall be true and correct copies of such documents.
4. CONDITIONS TO OBLIGATIONS OF THE PARTIES; DELIVERIES. All obligations
of the parties under this Agreement are subject to the fulfillment, prior to the
Closing, of all conditions precedent and to performance of all covenants and
agreements and completion of all deliveries contemplated herein, unless
specifically waived in writing by the party entitled to performance or to demand
fulfillment of the covenant or delivery of the documents. Chelsea's obligations
to purchase and pay for the Assets are further subject to the representations
and warranties of Seller being true and correct at the Closing and to the actual
sale and delivery of the Assets at Closing; and the sale, transfer, assignment,
conveyance and delivery of the Assets is further subject to the representations
and warranties of Chelsea being true and correct at the Closing.
4.01 Documents to be Delivered to Chelsea. At the Closing, the following
documents shall be delivered to Chelsea by Seller or the Shareholders, as the
case may be, which documents shall be satisfactory in form and content to
Chelsea's counsel:
(a) A copy of the directors' resolution or the minutes of the meeting
of the directors of Seller approving the execution and performance of this
Agreement.
(b) Any schedules and exhibits called for in this Agreement, properly
completed.
(c) Formal assignments of the Option and Management Agreement, which
shall reflect the existence of the Retained Interest.
4.02 Documents to be Delivered to Seller. At the Closing, the following
documents shall be delivered to Seller by Chelsea, which documents shall be
satisfactory in form and content to Seller's counsel:
(a) To the Shareholders, certificates evidencing the Exchange Shares
and Exchange Options in the proper denominations.
(b) To Seller, a copy of the directors' resolution or the mintutes of
the meeting of the directors of Chelsea approving the execution and performance
of this Agreement.
(d) To Seller, any schedules and exhibits called for in this
Agreement.
4.04 Conditions Precedent. The obligations of the parties under this
Agreement are subject to the satisfaction of the following conditions, unless
waived in writing, on or prior to the Closing, in addition to any other terms
and conditions precedent set forth in this Agreement:
<PAGE>
(a) The representations and warranties of every party contained in
this Agreement shall be in all material respects true and correct on and as of
the Closing Date as if made on such date.
(b) Chelsea and Seller each shall have performed all covenants and
agreements, satisfied all conditions and complied with all other terms and
provisions of this Agreement to be respectively performed, satisfied or complied
with by it as of the Closing Date.
(c) Chelsea shall not have discovered any material error,
misstatement or omission in or failure of any representation or warranty made by
Seller, and Seller shall not have discovered any material error, misstatement or
omission in or failure of any representation or warranty made by Chelsea.
(d) Chelsea shall have completed a due diligence examination of
Seller reasonably satisfactory to Chelsea covering all books, records, contracts
and other documents and all financial affairs of Seller. Seller shall have
completed a due diligence examination of Chelsea reasonably satisfactory to
Seller covering all books, records, contracts and other documents and all
financial affairs.
(e) Between the date of this Agreement and the Closing Date, Seller
shall not have done any act or engaged in any course of conduct prohibited in
this Agreement without the prior written consent of Chelsea.
(f) All legal matters in connection with this Agreement and the
consummation of all transactions herein contemplated, and all documents and
instruments delivered in connection herewith shall be reasonably satisfactory in
form to each party.
(g) No injunction or restraining order of any federal or state court
is in effect which prevents the purchase of the Assets or issuance and delivery
of the Exchange Shares and Exchange Options, and no lawsuit or other proceeding
has been filed by any person by the Closing Date contesting or attempting to
enjoin either action, and no action is taken and no law is passed after the date
of this Agreement which prevents the purchase of the Assets or issuance and
delivery of the Exchange Shares and Exchange Options.
5. ADDITIONAL COVENANTS OF THE PARTIES. The parties agree that, prior to
the Closing:
(a) The parties hereto each will use their best efforts to cause this
Agreement and all related agreements to become effective, and all transactions
herein and therein contemplated to be consummated, in accordance with its and
their terms, to obtain all required consents, waivers and authorizations of
governmental entities and other third parties, to make all filings and give all
notices to those regulatory authorities or other third parties which may be
necessary or reasonably required in order to effect the transactions
contemplated in this Agreement, and to comply with all federal, local and state
laws, rules and regulations as may be applicable to the contemplated
transactions.
(b) The parties each agree that it will not do any thing or act
prohibited by this Agreement or any related agreement, or fail to do any thing
or act which it has undertaken to do in this Agreement or any related agreement.
6. TERMINATION OF THIS AGREEMENT.
6.01 Grounds for Termination. This Agreement shall terminate:
(a) By mutual written consent of Chelsea and Seller;
(b) By Seller or Chelsea, if:
(i) all the conditions precedent to its respective
obligations hereunder have not been satisfied or waived prior to the
Closing Date, as it may be accelerated or extended;
<PAGE>
(ii) either party shall have defaulted or refused to perform
in any material respect under this Agreement, or if Chelsea or Seller
should have reasonable cause to believe there has been a material
representation concerning, or failure or breach of, any representation or
warranty by the other party, or if it appears that either Seller or Chelsea
has committed any unlawful acts affecting the other party;
(iii) the transactions contemplated in this Agreement and
related agreements have not been consummated on the Closing Date, as it may
be accelerated or extended, OR
(iv) either Chelsea or Seller shall reasonably determine that
the transactions contemplated in this Agreement have become inadvisable by
reason of the institution or threat by any federal, state or municipal
governmental authorities or by other person whatever of a formal
investigation or of any action, suit or proceeding of any kind against
either or both parties which in one party's reasonable belief is material
in light of the other party's business, prospects, properties or financial
condition;
6.02 Manner of Termination. Any termination of this Agreement shall be
made in accordance with the above listed grounds and, if terminated by a
corporation, shall be evidenced by written resolution of the terminating party's
board of directors. Written notice of termination shall be given to the other
party as required in this Agreement as promptly as is practical under the
circumstances. Upon a party's receipt of such termination notice, this Agreement
shall terminate and the transactions herein contemplated shall be abandoned
without further action by the parties.
6.03 Survival of Confidentiality Provisions. Upon termination of this
Agreement for any reason, (i) the covenants of the parties concerning the
confidentiality and proprietary nature of all docuemnts and other information
furnished hereunder shall remain in force except as to information which has
otherwise become public knowledge, and (ii) each party shall promptly return all
documents received from the other party in connection with this Agreement. This
Section constitutes a mutual covenant of the parties, and either may judicially
enforce it.
7. NECESSARY INFORMATION. Seller shall furnish to Chelsea promptly upon
its request all information regarding Seller and its business, assets,
properties, and financial condition which, in the judgment of Chelsea, is
necessary to enable Chelsea to conduct its due diligence examination relating to
the proposed purchase of the Assets. Each of the parties hereto shall furnish to
the others all information concerning such party required for inclusion in any
application or statement to be filed or made by the other party with or to any
governmental agency or other third party in connection with the proposed sale of
the Assets.
8. MISCELLANEOUS PROVISIONS.
(a) This Agreement shall be binding upon the parties, and respective
successors, assigns and legal representatives and shall be governed and
interpreted under the laws of the State of Nevada. This Agreement shall be
interpreted as if all parties shared equally in its drafting and preparation.
(b) The parties agree to conduct themselves and their mutual dealings
in connection with this Agreement in accordance with the highest standards of
commercial honor.
(c) This Agreement and the agreements contemplated hereby constitute
the entire agreement of the parties regarding the subject matter hereof, and
supersede all prior agreements and understandings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof.
(d) If any provision of this Agreement is held to be illegal, invalid
or unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Further, in lieu of such
illegal, invalid or unenforceable provision, there shall be added automatically
as part of this Agreement a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible and be legal, valid and
enforceable.
<PAGE>
(e) This Agreement may be amended, modified, or supplemented only by
instrument in writing executed by all parties.
(f) The parties shall bear their own fees and expenses incurred in
connection with the transactions contemplated herein.
(g) This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument. Execution and delivery of this Agreement by
exchange of facsimile copies bearing facsimile signature of a party shall
constitute a valid and binding execution and delivery of this Agreement by such
party. Such facsimile copies shall constitute enforceable original documents.
(h) The failure of either party to insist, in any one or more
instances, upon the performance of any of the terms, covenants or conditions
herein or to exercise any right hereunder shall not be construed as a waiver or
relinquishment of the right in the future to insist upon full performance of
such term, covenant or condition.
(i) Neither this Agreement nor any right created hereby or in any
agreement entered into in connection with the transactions contemplated hereby
shall be assignable by any party hereto without the written consent of the
parties not seeking assignment. No such assignment shall relieve the assignor of
any obligations created under this Agreement.
(j) Except as otherwise provided herein, the terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the parties and
their respective heirs, legal representatives, successors and assigns. Neither
this Agreement nor any other agreement contemplated hereby shall be deemed to
confer upon any person not a party hereto or thereto any rights or remedies
hereunder or thereunder.
(k) Each party shall keep this Agreement and its terms confidential,
and shall make no press release or public disclosure, either written or oral,
regarding the transactions contemplated by this Agreement without the prior
knowledge and consent of the other parties hereto; provided that the foregoing
shall not prohibit any disclosure (i) by press release, Form 8-K filing or
otherwise that is required by federal securities laws, and (ii) to attorneys,
accountants, investment bankers or other agents of the parties assisting the
parties in connection with the transactions contemplated by this Agreement. In
the event that the transactions contemplated hereby are not consummated for any
reason whatsoever, the parties hereto agree not to disclose or use any
confidential information they may have concerning the affairs of the other
parties, except for information that is required by law to be disclosed.
(l) Any notice or communication hereunder or in any agreement entered
into in connection with the transactions contemplated hereby must be in writing
and given by depositing the same in the United States or Island of Nevis mail,
addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, by telefax transmission or by delivery
by use of a messenger which regularly retains its delivery receipts. Such notice
shall be deemed received on the date on which it is delivered to the addressee.
For purposes of notice, the addresses of the parties shall be the addresses set
forth in the preamble to this Agreement or any address subsequently furnished in
writing by a party.
(m) Each party represents and warrants to the others and agrees that
it has not employed or engaged, and will not employ or engage, any person as a
finder or broker in connection with the transactions contemplated herein, and
that no person is entitled to compensation as a finder or broker. Each party
hereby indemnifies the other parties and holds the other parties harmless from
and against any claims of any third persons claiming to have acted as a finder
or broker in connection with the transactions herein contemplated, and such
indemnity shall include all expenses, costs and damages arising from or related
to such claims, including reasonable attorneys fees.
<PAGE>
IN WITNESS WHEREOF, all parties have executed this Agreement, and Seller
and Chelsea have initialled every preceding page hereof, as of the dates
respectively indicated below.
CHELSEA ATWATER, INC. CASINO CASINO, PLC
By: /s/ John D. Brasher Jr. By: /s/ Michael Ryan
-------------------------------- -----------------------------
John D. Brasher Jr., CEO Authorized Officer
<PAGE>
Exhibit No. 10.8 to Form 8-K dated July 12, 1996 File No. 0-25022
------------------------------------------------ ----------------
ASSIGNMENT AND RESERVATION OF RIGHTS
DATED: July 12, 1996
Denver, Colorado
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, CASINO CASINO PLC, a company organized in the Island of Nevis
under Section 4(6) of the Nevis Business Corporation Ordinance 1984, as amended,
whose address is P.O. Box 556, Main Street, Charlestown, Nevis ("Assignor"),
hereby assigns and transfers to CHELSEA ATWATER, INC., a corporation organized
in the United States of America under the laws of the State of Nevada
("Assignee"), all its right, title and interest in, to and under the following
two agreements except as specifically reserved herein:
1. Option to Purchase dated June 26, 1996, between E.V.A. LIMITED, a
limited liability company organized in St. Vincent and the Grenadines under
the provisions of the Companies Act, Chapter 219, as Grantor, whose address
is c/o Casino Peniston, Peniston Valley, St. Vincent and the Grenadines
("EVA"), and Assignor as Optionee, consisting of an option to acquire all
of EVA's rights under certain leases affecting the Emerald Valley Casino
(also known as Casino Peniston) and portions of the Emerald Valley Hotel in
Peniston, St. Vincent and the Grenadines, British West Indies; and
2. Management Agreement dated June 26, 1996, between EVA and Assignor,
pursuant to which EVA appointed Assignor for an eighteen-month period as
the sole and exclusive manager for the purposes of operating and managing
the sports betting portion of the casino business carried on by EVA at the
Emerald Valley Casino; EXCEPT THAT Assignor reserves and retains the right
to receive eight percent (8%) of the net revenues produced by the sports
betting portion of such casino business and actually paid to and received
by Assignee. The term "net revenues" means revenues to Assignee after
payment or deduction of all payouts to winning bettors, all expenses,
charges and reserves, any other revenue interests granted by Assignee and
any other revenue or net revenue burdens, such as payments to licensees.
This Assignment is made, executed and delivered effective as of the date
below pursuant to the terms of that certain Asset Purchase Agreement between
Assignor and Assignee dated of even date herewith.
Assignor acknowledges and agrees that the foregoing assignment and transfer
does not relieve it from any liabilities or obligations under the agreements
herein assigned and transferred to Assignee.
By signature below, Chelsea Atwater, Inc. accepts this assignment and
transfer and accepts all liabilities and obligations under such agreements. This
Assignment of Rights and the performance of all obligations herein has been
authorized by all requisite corporate action of both parties.
CASINO CASINO PLC (Assignor) CHELSEA ATWATER, INC. (Assignee)
By /s/ Michael Ryan By: /s/ John D. Brasher Jr.
---------------------------- ------------------------------------
AUTHORIZED OFFICER JOHN D. BRASHER JR.
CHIEF EXECUTIVE OFFICER
ACKNOWLEDGMENT
<PAGE>
STATE OF COLORADO )
) SS.
COUNTY OF DENVER )
I HEREBY CERTIFY that before me, a Notary Public duly commissioned and
qualified in and for the above jurisdiction, personally came and appeared
Michael Ryan, an authorized officer of Casino Casino PLC and John D. Brasher
Jr., Chief Executive Officer of Chelsea Atwater, Inc., who after being duly
sworn declared that they executed the foregoing Assignment of Rights as their
free acts and deeds and that the statements therein set forth are true and
correct.
Subscribed and Sworn to on July 12, 1996.
X /s/ Elisabeth M. Crosse Notary Commission Expires:
---------------------------------------
NOTARY PUBLIC
SEAL __________________________
